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One of the great things about solar power is that the fuel cost is essentially zero. Nada. Zip. However, you still have to pay for the panels, and the expertise that's required to install them on your property. Here are the top three facts to know about the cost of solar panel installations.
The cost of installation of a residential photovoltaic system is determined by two major cost categories: hardware and "soft costs".
The hardware category includes modules (also called solar panels), inverters, racking systems, and other electrical and structural components (lovingly called "balance-of-system" or BOS hardware). The cost of solar hardware has decreased significantly in the last few years, and today, hardware costs account for about 32% of the total installation cost.
The second major cost component, the so-called "soft costs", includes labor, contractor profits, contractor overhead, permits and customer acquisition costs. All of these items add up to about 68% of the installation cost.
Since 2009, the cost of residential solar panel systems has decreased by a whopping 60%. Combined with the 30% federal tax credit, this reduction in overall installation costs has been a major catalyst for the growth of the solar industry.
Intense competition and economies of scale in the solar hardware market led to plummeting prices for solar panels followed by large reductions in inverter prices and, more recently, in racking system prices. However, after years of steady decline, costs are now leveling off.
The next challenge in cost reduction is decreasing the share of "soft costs". However, cost items such as labor, profit and overhead tend to be much more "sticky" than hardware costs. Although further consolidation in the industry may bring further reductions in this category, the rate of decrease is likely to be less dramatic.
Although cost per watt is a handy indicator for understanding how much solar panel installations cost, it should be used together with another cost metric: levelized cost.
Levelized cost takes into account the location of the installation as well as the expected lifetime of the solar panels. It is generally expressed in dollars (or cents) per kWh. This is a very useful metric, as it allows us to compare the cost of solar to the status quo - your current utility rate. When the levelized cost is the same or less than the utility rate, we have "grid parity".
We prepared these handy maps for you to compare the levelized cost of solar to your utility in your state or province.
Cost of residential solar power is less than the average utility rate in all U.S. states after the federal tax credit. Learn more.
A number of provinces are offering solar incentives, making solar energy in Canada more attractive. Learn more.
Plenty of sun, and high residential electricity prices make solar an ideal choice in all Australian states. Learn more.
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- We will find you up to 3 installers in your area to provide free, no-obligation quotes.
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1. Defined Terms.
a. Program Website: https://sunmetrix.com/
b. INSTALLER: The solar PV installation company either selected by the QUOTE-REQUESTER or by Sunmetrix.
c. QUOTE-REQUESTER is a potential residential solar customer that meets all of the following criteria: (1) owns his or her own house in a state/province where the INSTALLER operates; (2) is a legal resident of the United States or Canada; (3) is 18 years of age or older; and (4) otherwise meets Sunmetrix’s requirements, as may be updated by Sunmetrix from time to time.
d. REFERRAL FEE: The amount the INSTALLER agrees to pay Sunmetrix upon completion of the residential INSTALLATION. For U.S. companies, the indicated amount is in U.S. dollars. For Canadian companies, the indicated amount is in Canadian dollars. In the case of commercial solar quote requests, the referral fee is determined on case by case basis.
e. CASH-BACK: The amount paid to the QUOTE-REQUESTER, representing 50% of the REFERRAL FEE paid upon completion of the residential solar photo-voltaic INSTALLATION. For U.S. residents, the indicated CASH-BACK amount is in U.S. dollars, and the CASH-BACK will be sent electronically either with a PayPal Payment or with an Amazon eGift Card. For Canadian residents, the indicated CASH-BACK amount is in Canadian dollars, and the CASH-BACK will be sent electronically with an Interac e-Transfer.
f. INSTALLATION: The solar photo-voltaic INSTALLATION is for a residential system with a minimum installed capacity of 2 kW DC, installed within three (3) years of the QUOTE-REQUESTER receiving their confirmation email from Sunmetrix, indicating the INSTALLER that will be following up with them for their solar quote, along with the CASH-BACK amount if they install their PV system with that INSTALLER. Systems that are less than the minimum will not qualify for the CASH-BACK program.